Michelle Maklin reports on another Double Standard by John Edwards, this time in regard to the Subprime lending debacle that is screwing the poor over because they were given loans that the banks knew they would not be able to payback. This is beyond the flip-flops of the past as Edwards has investment in those Subprime Lenders, yet he rages against them in his speeches to get votes.The only reason he is going to divest himself of these investments is because it has come to public light and the fact that he will lose more money as the Subprimes collapse. I think the latter is his real reasoning. If this was such a concern for him, he would have dumped those investments long ago when they were making him big money.
America please wake up and realize this fraud for what he is.
John’s New Logo – “I was for Making Money from SubPrime Lenders Before I lost Money to Them”
John Edwards: “Predatory lending” beneficiary?
Welcome to John Edwards’ America, a land where Democrat presidential candidates demonize the businesses that made them rich. Via the WSJ today, a fresh look at silky hypocrisy. Headline: “Edwards, Foreclosure Critic, Has Investing Tie to Subprime Lenders:”
As a presidential candidate, Democrat John Edwards has regularly attacked subprime lenders, particularly those that have filed foreclosure suits against victims of Hurricane Katrina. But as an investor, Mr. Edwards has ties to lenders foreclosing on Katrina victims.
The Wall Street Journal has identified 34 New Orleans homes whose owners have faced foreclosure suits from subprime-lending units of Fortress Investment Group LLC. Mr. Edwards has about $16 million invested in Fortress funds, according to a campaign aide who confirmed a more general Federal Election Commission report. Mr. Edwards worked for Fortress, a publicly held private-equity fund, from late 2005 through 2006.
Asked about the matter, Mr. Edwards yesterday pledged that he would personally provide financial assistance to New Orleanians who are facing foreclosure by Fortress-affiliated businesses or have lost their homes already. “I intend to help these people,” the former North Carolina senator said.
He also promised to cleanse his portfolio of any investments that may be profiting from their losses. “I am going to divest” from any Fortress funds that have a stake in the subprime lenders that filed the foreclosures, he said in a telephone interview. “I will not have my family’s money invested in these firms.”
Such a man of belated principle is he.
Mr. Edwards didn’t give details on how or when he was going to proceed, either to alter his holdings or to aid borrowers. He said he plans to begin making amends to New Orleans homeowners first by contacting them and “seeing where they are in the process.” He said his help may come from his own cash or in collaboration with a charity that specializes in repairing homes. The foreclosures, Mr. Edwards said, “run counter to what I’m about.”
On the campaign trail, Mr. Edwards has particularly attacked lenders behind foreclosures in storm-slammed Louisiana. In April, he visited the devastated Lower Ninth Ward neighborhood to voice one of his main antipoverty planks: a proposal to rein in subprime-mortgage companies whose “shameful lending practices,” he said, threaten millions of working-class homeowners. “While Washington turns a blind eye, irresponsible lenders are pulling a fast one on hard-working homeowners,” Mr. Edwards said a few days later.
At the time in late 2005 when Mr. Edwards went to work for Fortress, it already had a stake in one subprime lender that subsequently foreclosed on some Katrina victims, Green Tree Servicing LLC. While he was there, Fortress acquired a second, Nationstar Mortgage LLC. Fortress paid Mr. Edwards $479,512 in 2006 for part-time work, a Federal Election Commission report in May showed.
After leaving the firm, he kept about half of his net worth in Fortress funds. And Fortress employees have collectively made up the largest class of political contributors to Mr. Edwards. Workers there put up more than $150,000 toward his presidential run in the first six months of the year.
The WaPo asked Edwards about Fortress in May. He says he was clueless. Yeah:
The hedge fund that employed John Edwards markedly expanded its subprime lending business while he worked there, becoming a major player in the high-risk mortgage sector Edwards has pilloried in his presidential campaign.
Edwards said yesterday that he was unaware of the push by the firm, Fortress Investment Group, into subprime lending and that he wishes he had asked more questions before taking the job. The former senator from North Carolina said he had asked Fortress officials whether it was involved in predatory lending practices before taking the job in 2005 and was assured it was not.
And besides, when Edwards is involved with it, it isn’t “predatory lending,” you see. It’s called helping the poor, of course! Spin, spin, spin those Two Americas, Johnny Boy. More from the WSJ:
Edwards aides, while apologetic for the foreclosures, defended subprime lending in general. They pointed out the distinctions between subprime loans, which are extended to people with less-than-stellar credit, and “predatory” loans, which often target the same consumers but employ pressure sales tactics and punitive covenants that can strip equity from home buyers and tie them to onerous payments. Subprime loans, defenders note, can benefit many lower-income people previously locked out of home ownership.
Mortgage experts say there’s no clear line dividing standard subprime loans from “predatory” ones. Generally speaking, said Thomas Lawler, a former official at mortgage buyer Fannie Mae, predatory loans carry high interest rates that are allowed to rise but not drop. They may be loaded with prepaid fees. Lenders may make monthly payments look smaller than they really are by not requiring borrowers to put taxes and insurance in escrow. And the loans generally don’t allow early payoff without a steep penalty. That bars refinancing if interest rates drop.
Maybe someone should organize a “poverty tour” of those 34 homes in New Orleans whose owners have faced foreclosure suits from subprime-lending units of Fortress. They can rename the neighborhood “Edwardsville.”
***
Have a chuckle. Read John Edwards’ campaign page on “fighting predatory mortgages.”
Betsy Newmark weighs in:
I still think that there is something suspect about this nothingburger of a job that Edwards had there at Fortress. He earned close to half a million dollars for a 15-month stint working at Fortress to study the relationship of capital and poverty, but seemed to miss the whole involvement of his employer with subprime lending. If you or I wanted to study poverty and capital, we’d probably have to go to a university and do some research. Giving a job for someone to do some study while on the job just doesn’t rate a six-figure salary for anyone besides a potential presidential candidate. It seems yet another way to get around the campaign finance laws.
Update: Will comment later for now you can read the Washinton Post article on it.
Fortress hired Edwards as an adviser in October 2005, nearly a year after his losing campaign as Democratic vice presidential candidate. At the time, it owned a major stake in Green Tree Servicing LLC, which rose to prominence in the 1990s selling subprime loans to mobile-home owners and now services subprime loans originated by others.
Fortress and its partners bought Green Tree in 2003. According to documents filed with the Securities and Exchange Commission in April, its holding in Green Tree was as high as $492.4 million at the end of 2005 — 4 percent of Fortress’s holdings at the time.
$492 Million and it was only 4 percent of Fortress’s holdings…
Last July, Fortress expanded its stake in the industry by buying Texas-based Centex Home Equity, a top-25 subprime lender, for an estimated $540 million. In December, Centex Home Equity, now called Nationstar Mortgage, bought the loan-origination division of Champion Mortgage, bringing another subprime lender into the Fortress portfolio.
In March, Newcastle Investment Corp., a real estate investment trust managed by Fortress, announced that it, too, was moving into the subprime market with the purchase of a $1.7 billion loan portfolio. Also in March, Fortress bought about $4 billion in subprime loans from Fremont General Corp.
Sounds like they learned a lot from John. Like what Subprime lenders to buy up…
Edwards said yesterday that he recalls being told at the time of his hiring that some of Fortress’s private equity holdings did lend to start-up businesses, which is why he asked about predatory lending practices. But he could not recall whether the firm’s partners told him it had a major stake in Green Tree.
Note: He could not recall
“Those are the things I remember,” he said. “They may have told me more.” Had he learned that Fortress owned a loan servicer with a history of predatory lending practices, he said, “I would have asked some very specific questions about it.”
So if they did tell he more he asked some very specific questions, that he cannot recall, however if they did not tell him, which he cannot recall, then he would not have asked them very specific questions? Come on John, either they told you or they did not.
Edwards said his role at a company with a growing stake in the subprime industry should not be seen as undermining his commitment to helping the poor. He noted that since the 2004 election, he has founded a poverty think tank, started a charity for poor college students and assisted campaigns to raise the minimum wage.
“If you put it in the context of all those things, it’s very clear where my heart is and where my commitment is,” he said.
Great a think tank for poverty. Maybe try investing that same money into the poor instead of paying rich people how to think of ways to help the poor. Yes John we see where your heart and commitment are. Sort of like the Walmart workers and your greed to get a Playstation…
Disclosure forms to be released on Tuesday will show how much Edwards was paid for his work at Fortress, which lasted until December 2006, when he stepped down to run for president. He has received $167,460 in campaign contributions from Fortress employees and their families, his largest sum from a single company.
Wow, 167,000 from employees and family. Sounds fishy if you ask me. Never mind that he profited off of the poor, he turned it into a campaign funding option, without having “Big business” lobby him. Sounds like a little more reform is needed there.
Edwards, a highly successful trial lawyer before entering politics, said yesterday he went to work for Fortress to learn more about capital markets. He acknowledged the job provided a financial benefit at a time when his only other salary was $40,000 from the poverty center.
Awww. John only got $40,000 from the Povert Center, what a shame he needed to make more… I bet that $40,000 a year would have been more than enough to pay the mortgage for some of these people that Fortress forclosed on.
I would also like to know exactly what he did for Fortress, where he was unaware of what their stakes were in a company that had been practicing sub-primes since the 90s.
“I’m 53 years old and have worked my whole life since I was a teenager, and here I was unemployed except for a part-time job, and so I wanted to work and earn an income,” he said. “No question that was part of it.”
Trial Lawyer, Former Senator… Hmm needs income, more than the $40,000 he was getting from his “Part-time” job at the poverty center. Sounds more and more like he is covering something up…
At the time of his hiring, he said, he sought assurance that Fortress was not involved in predatory lending, union-busting or dismantling companies. His work, he said, involved giving the firm insight into Washington and observing trends he saw while traveling the country. Some months found him at the firm’s New York offices for several days, and other months he would not go at all, he said.
Insight into Washington, another words who to manipulate and how to do it…
In hindsight, Edwards said, he does not regret taking the job. “I guess it’s my belief that I did learn something about capital markets that’s valuable,” he said. “I think it’s very important for a president to understand how markets operate.”
Hey John, there are many ways to learn how markets operate, other than stealing from the poor. I bet the Enron could have taught you a couple of things if you had signed on with them prior to their collapse.
All in all, John you are making excuses because you got caught red handed with your hand in the piggy bank. You are full of contradictions. You knew what they did, you assisted them in growing and now that the Presidential nomination is at stake you are claiming to be against them.
Filed under: Politics | Tagged: John Edwards |
Waste Of My Oxygen 
Interesting